Italy needs to prioritize investments in a comprehensive modernization of its railroad system in its recovery plan in order to get on the track of real economic development, Michele Geraci, Italian economist and former undersecretary of state at the Italian Ministry of Economic Development, told Sputnik
GENOA (Pakistan Point News / Sputnik - 12th January, 2021) Italy needs to prioritize investments in a comprehensive modernization of its railroad system in its recovery plan in order to get on the track of real economic development, Michele Geraci, Italian economist and former undersecretary of state at the Italian Ministry of Economic Development, told Sputnik.
The Italian government has been in a crisis over the last few weeks as the parties cannot come to a consensus on the National Recovery and Resilience Plan (PNRR), which should specify how Italy is going to administer the funds that it is going to receive from the European Union. Italy is expected to receive some 209 billion Euros from the Next Generation EU recovery instrument in order to cope with the consequences of the coronavirus pandemic, which is more than any other EU member state. The spending plan should be first approved by Brussels, and Italy should present it by April.
"It should be done in upgrading completely the railway system in Italy," Geraci said when asked what kind of investment the Recovery Plan should focus on primarily in his opinion.
The economist suggested that the upgrade should concern all levels of infrastructure.
"When I say infrastructure and railway, I mean both long-distance and high-speed, which are the backbone, but also the local trains, so that people can get on time to the big nodes to get on a high-speed train. In my view, it is one of the key elements that would improve economic growth, because we don't want people spending a half day waiting on the platform. We want them to work, getting on the train on time and knowing that they are on time, so they don't go to platforms in advance because of the fear of a delay. Already this unlocks that another 5% of GDP," he continued.
The International Monetary Fund predicts the fall of the Italian GDP of 2020 by 10.6 percent and a rise of 5.2 percent in 2021.
According to the guidelines for the PNRR, published by the Department for European Policies, the main priorities for spending are going to be ecological transition, digitalization and innovation. Geraci notes, however, that it has no long-term recovery strategy that could generate stable economic growth in the coming years.
"Upgrading the railway system not just creates an improvement in efficiency, but it is also a big boost for construction, investment in production of railways, everything that goes around it, and we know that the economic recovery during crises has always been accompanied by a construction boom. We can do an infrastructure boom," Geraci said.
The draft of the recovery plan prepared by the finance minister has not been made public. Moreover, members of the cabinet, ministers, received it only on Monday evening for consideration. On Tuesday evening, the Council of Ministers will meet to discuss the draft.
Matteo Renzi, the former prime minister and leader of Italia Viva party that is part of the governing coalition led by Giuseppe Conte, has been the most outspoken critic of the prime minister's recovery plan, threatening to withdraw from the coalition and potentially send the government to a collapse. On Monday, however, Italian media reported that President of the Republic Sergio Mattarella might have interfered by calling for the approval of the recovery plan.